Employment taxation in India has undergone a radical change over the past couple of years. The rules for taxability of perquisites (benefits provided by an employer) got amended drastically in the light of introduction of a new tax namely, Fringe Benefit Tax (FBT) in 2005. As a result, the incidence of tax for certain employee benefits shifted from employees to the employer.

Consequently, the corporates are having a re-look at their compensation and reward policies to minimise the impact of FBT and at the same time achieve a tax-efficient compensation structure for its employees.